Lack of financing hits sales of Threshers stores

Federation of Small Businesses urges banks to start lending in 2010
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The Independent Online

The administrator to Threshers owner, First Quench Retailing (FQR), has sold less than a tenth of the off-licence group's 1,200 stores more than two months after it collapsed into administration, as a lack of financing continues to stymie potential buyers.

The news came as the Federation of Small Businesses (FSB) made a fresh demand for banks to open their purse strings and start lending to companies generally. It said the consequences would otherwise be high streets further dominated by empty storefronts, charity and pound shops.

Shortly after being appointed administrator in October, KPMG said it was inundated with requests from potential buyers of stores but interested parties gradually fell by the wayside.

Mick McLoughlin, the joint administrator of First Quench and global head of restructuring at KPMG, yesterday said: "In the insolvency world, we are seeing a lot of initial interest from buyers but 'cold feet' sets in when the offer deadline looms."

An industry source said that raising funds to buy stores was a major issue with the FQR stores and that banks did not want to touch the high street with a "barge pole unless they are dealing with a cash-rich big retailer". The bookseller Borders UK also closed the doors on its 45 stores last week after buyers could not be found.

KPMG has so far sold just 90 out of 1,202 stores. These include 13 Wine Rack shops to Venus Wine & Spirits Merchants, as well as 22 FQR outlets to SEP Properties, 34 to Rhythm & Booze, and 14 to Wickham Vineyard. A further 12 shops are still under offer.

FQR – which also operated the Haddows, The Local, Victoria Wine and Bottoms Up fascias – was hit by the withdrawal of credit insurance to suppliers that crippled deliveries to stores.

John Wright, the FSB chairman, said: "One of the most important things that must be done in the coming year is for banks to return to their normal lending criteria, and to start playing their role as lenders with a large dose of modesty."

He added: "There are plenty of prime sites vacated in our high streets and this nation of shopkeepers should be given the funds by the banks to fill in these empty spaces.

"Rents are low and landlords are in no position to barter upwards rent reviews. Failing a better lending climate, all we will see on our high streets are bank branches with their vaults full to the brim with our money while all around them consists of charity and pound shops."

By store count, the administration of the Threshers owner was one of the biggest in the history of the UK retail sector. But the demise of Woolworths, which had 800 stores, resulted in significantly more job losses of 27,000. FQR had 6,300 staff when it collapsed in October.

KPMG appointed Christie's, the property firm, on 20 November to sell about 700 FQR stores that had closed, and yesterday said it had received offers on about 280 which it is evaluating. The accountancy firm had been hoping to sell 500 shops in large parcels or as going concerns, however, a week before Christmas, KPMG handed the remaining 470 stores to Christie's.

The 52 Threshers franchisees – who want to ditch their franchise agreement with FQR – have provisionally agreed a deal with KPMG to allow them to continue trading as independents, although terms have not yet been finalised. The franchisees are being advised by the law firm Blake Lapthorn.